Why the Majors Love Mandates

by Eric Peters
EricPetersAutos.com

I’ve written previously about the add-on cost of government-mandated “safety” equipment such as multiple air bags and (most recently) stability control, tire pressure monitors and (soon) back-up cameras and (very possibly) in-car Breathalyzers, too. It’s hard to pin down the exact per vehicle cost of these things – chiefly because they’re not listed as individual options but rather folded into the “base price” of the vehicle – but a reasonable estimate is probably around $2,500 or so at the point of sale (this naturally includes mark-up).

But the aspect I’ve not written about is the opportunity cost imposed by these mandates. The stifling effect, in other words, on what-might-have-been.

And also, the probable fact that the major car companies are happy about both of these costs – the additional built-in profit-per-car as well as the stifling effect.

As the nattily dressed hitman in Pulp Fiction put it, allow me to elucidate:

Let’s say you are a bright backyard engineer – maybe even an actual engineer. You like to design things and one day hit upon the notion that maybe your design for a new car would be something people might be interested in. That you could do it better or less expensively or just more interestingly than the established players in the field.

Sixty-odd years ago, a guy named Preston Tucker had such an idea. So, like Tucker, you get to working in the garage out back. The project begins to come together and as word spreads, you discover that yep, there are people interested in what you’re doing.

Unfortunately, some of those people are employees of the government.

Specifically, the Department of Transportation and the Environmental Protection Agency. They will swoop in with turgid – and then threatening – demands that you sell no cars to the public (no matter how much the public may want those cars) until those cars have complied with every line-item regulation in their repertoire of regulations and codes. Oh, and not just that. Even if by some miracle your new car produces less pollution than a new Prius – even if it is more crashworthy than a new Mercedes S-Class – you will still be required to demonstrate it to their satisfaction. Which if you’re not familiar with the way a car company complies with federal ukase involves (for example) destroying dozens of brand-new cars in various types of crash tests to placate Uncle Sam’s minions.

And who can afford to destroy a dozen perfectly good brand-new cars? A major automaker can – but not you.

This one thing alone likely will (and in fact does) constitute a crippling obstacle that will make it economically impossible for you to sell your new car to the public. Even if, like the ’48 Tucker, your car is actually more advanced and innovative than the cars being sold by the majors.

Maybe you’ve figured out a way to cut the weight down to 1,600 pounds by using a spaceframe and lightweight composites – and so the car gets 80 MPG. Maybe you found out, after doing some surveys of potential customers, that a simple, light, fuel-efficient car was very much desired. One that didn’t come with $2,500 (or more) worth of government-mandated “safety” equipment but which did cost $2,500 less than a car with those items. So you decided to try to build it – knowing they (the buyers) would come.

Instead, the government came.

Down. Hard.

First you’d be shut down; probably fined – then possibly jailed. If you declined to pay the fine or (much worse) had the insolence to continue building cars the public – vs. the government – actually wanted to buy as opposed to forcing you to build.

And that is very likely just what the established car companies want – which is why the established car companies have become such big boosters of whatever the latest “safety” technology happens to be – and even supine in the face of potentially crippling mandates (to smaller competitors, anyhow) such as the recently enacted federal rule that will require all new cars to average 50-something MPG (while also complying with all the existing federal ukase that has driven the weight of the average new car up by 500 pounds, on average) within a few years from now. All without any real concern about such doesn’t-matters as how much it will end up costing. Because of course, they aren’t the ones paying the bill.

We are.

Walking arm in arm, the major automakers and their friends in Washington know they serve one another’s best interests now.

And their interests include keeping you and any other subversive tinkerer off the field. They want the market cornered.

And you, too.

Once you grasp the nature of this symbiotic relationship you will understand why there hasn’t been a single successful new car company (outside of politically correct and wholly government-subsidized efforts such as Tesla Motors, producer of the $100k electric Edsel) in decades – and a winnowing of the previously existing herd down to a handful of enormous cartels that are (drum roll, please) “too big too fail.”

These cartels enjoy a 1-800 line (via the police power of the state) to your wallet and mine – directly and indirectly. They also enjoy protection – from competition, especially.

It’s part of the reason why they (the cars) all look just the same, mostly drive just the same – and force-feed you the same “features,” too. Because there’s no legal alternative, no third option. It’s Tweedledee or Tweedledum. In politics and cars.

Independents need not apply.

Reprinted with permission from EricPetersAutos.com.

September 14, 2011

Copyright © 2011 Eric Peters

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